Eurozone Crisishttp://huffingtonpost.com/rss/liveblog/liveblog-461.xml
Lates updates of 'Eurozone Crisis' liveblogen-usCopyright 2011, HuffingtonPost.com, Inc.LiveblogRSS 2.0 generation classhttp://blogs.law.harvard.edu/tech/rsshttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#44_global-stock-markets-lost-12-percent-of-value-or-63-trillion-in-2011
lost $6.3 trillion in wealth in 2011 largely because of fears of a eurozone breakup, according to The Financial Times. The value of global stock markets fell 12 percent to $45.7 trillion.
From the FT:

The S&P 500 is flat this year while the FTSE 100 has only dropped 5.5 per cent. But the Eurofirst 300 gauge of blue-chip European companies has lost 11 per cent, led by the French and Italian exchanges. The MSCI Emerging Markets index has shed a fifth of its value despite strong growth in China and other emerging markets.
Asian equity markets were hit particularly hard with Japanâs Nikkei index losing 17.3 per cent this year, Hong Kongâs Hang Seng index 20 per cent and the Shanghai Composite 22 per cent.

--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#44_global-stock-markets-lost-12-percent-of-value-or-63-trillion-in-20112011-12-30T17:29:55-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#43_subsidy-cut-threatens-italys-newspapers
Up to 100 Italian newspapers will be forced to close after the Italian government slashes subsidies to newspapers in the name of shoring up its finances, according to The Financial Times.
The subsidy cut amounts to a 69 percent cut in funding for newspapers, according to the FT. It was ordered by the government of the previous prime minister, media magnate Silvio Berlusconi, and approved by the new government of Mario Monti. Though the newspaper industry is in decline, some say that these local and sometimes partisan newspapers give voice to stories that the mainstream media ignores, according to the FT.
Staffers at the communist daily Liberazione, which has 5,000 readers, are staging an occupation of the newsroom this weekend to prevent the owners from shutting down the paper after its possible last issue is released on Saturday, the FT reports.
--Bonnie Kavoussi ]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#43_subsidy-cut-threatens-italys-newspapers2011-12-30T14:08:36-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#42_investors-unmoved-by-lower-borrowing-costs-for-italy
fell by half to 3.25 percent at an auction on Wednesday: a vote of confidence in Italy's ability to pay off its debts for half a year.
But investors remained skeptical about Europe's long-term economic prospects. The DAX in Germany plunged 1.04 percent on Wednesday, the CAC in France fell 0.38 percent, and Italy's FTSE Italia All-Share neither gained nor lost ground. The interest rate on Italy's ten-year government bonds remained unsustainable at 6.80 percent.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#42_investors-unmoved-by-lower-borrowing-costs-for-italy2011-12-28T10:28:57-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#41_eu-admits-that-austerity-will-lead-to-higher-youth-unemployment
admitted in a report in mid-December that its medicine for the sovereign debt crisis may be poison for Europe's long-term economic outlook.
The report said, according to The Wall Street Journal, that the imminent economic slowdown in Europe, caused in part by a contraction in government spending, will worsen job prospects for young people, and "young people remain the hardest hit by the crisis and its aftermath." The report added that "income shocks may prove permanent."
The youth unemployment rate in the European Union is disastrously high at 20 percent, with a high of 48 percent in Spain, according to the WSJ.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#41_eu-admits-that-austerity-will-lead-to-higher-youth-unemployment2011-12-28T10:08:50-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#40_european-safe-haven-deposits-reach-alltime-high-again
breaking a record just a day earlier, the amount of overnight deposits parked at the European Central Bank's overnight deposit facility reached another record high on Tuesday: $591 billion, a 10 percent increase from $538 billion the day before, according to The Wall Street Journal.
The deposits attract an interest rate of just 0.25 percent and could translate into a loss for banks, highlighting the rising level of banks' distrust in any risky lending as banks seek to shore up capital to meet new regulatory requirements.
--Bonnie Kavoussi
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#40_european-safe-haven-deposits-reach-alltime-high-again2011-12-28T10:05:45-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#39_italy-suffers-from-worst-christmas-shopping-in-ten-years
Italy suffered from the worst Christmas shopping season in ten years, according to the Italian consumer group Codacons, Bloomberg News reported.
Italians spent $62.75, or 48 euros, less per person during the holidays this year than the average of the past five years, according to Codacons.
Shoe and clothing stores suffered the most, with sales in that sector plunging 30 percent compared to previous years, according to Codacons.
As the Italian government seeks to rein in its debt by slashing spending and collecting more in taxes, Italians are cutting back in their spending, which will continue to hurt the economy. Italy's latest austerity plan will cost every Italian family about $1,476, or 1,129 euros, according to the Italian consumer group Federconsumatori, Bloomberg News reported.
The FTSE Italia All-Share, Italy's main stock index, fell 0.85 percent on Tuesday.
--Bonnie Kavoussi
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#39_italy-suffers-from-worst-christmas-shopping-in-ten-years2011-12-27T15:27:15-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#38_european-safe-haven-deposits-reach-alltime-high
Banks parked a record high number of deposits in the European Central Bank's overnight deposit facility, which is considered to be a safe haven, according to The Wall Street Journal.
Banks deposited $538 billion, or 412 billion euros, overnight at the ECB on Monday, up 19 percent from $453 billion, or 347 billion euros, on the Thursday before Christmas, according to ECB data cited by the WSJ.
The high level of overnight deposits reflects the rising level of distrust in inter-bank lending, in conjunction with continued liquidity in the eurozone markets as the ECB lends more to banks, the WSJ noted.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#38_european-safe-haven-deposits-reach-alltime-high2011-12-27T10:18:17-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#37_french-unemployment-at-12year-high
reached a 12-year high in November, placing pressure on French President Nicolas Sarkozy's reelection campaign, according to Reuters.
France's labor ministry reported that the number of registered jobseekers in France rose to 2.85 million, 1.1 percent more than in October and 5.2 percent more than during the same period last year, according to Reuters.
The unemployment rate in France rose in the third quarter to 9.3 percent from 9.1 percent in the second quarter, according to France's national statistics office, Reuters reported.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#37_french-unemployment-at-12year-high2011-12-27T09:55:36-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#36_postchristmas-shopping-boosts-european-stocks
The stock prices of European retailers rose after reports of shoppers flooding stores both in Europe and the United States on Monday, the day after Christmas, according to The Financial Times.
The stock price of German retailer Metro rose 1 percent on Tuesday, France's Carrefour rose 0.6 percent, and Swiss watchmakers Swatch and Richemont rose 0.7 percent, according to the FT.
The DAX stock index in Germany rose 0.23 percent, while the CAC 40 in France fell just 0.03 percent.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#36_postchristmas-shopping-boosts-european-stocks2011-12-27T09:39:06-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#35_eu-rolls-out-plan-to-combat-youth-unemployment
getting more of the continent's young people into the workforce.
Per a press release from the European Commission, the program will allocate 4 million euro toward getting young people into employment, education or training within four months of leaving school.
At the moment, the EU has a youth unemployment rate of about 21 percent, meaning that 5 million young people are out of work. According to the European Commission, a total of 7.5 million people age 15 to 24 are not employed, attending school or involved in work training.
The lack of opportunities for Europe's young people has inspired protests and riots in some countries and mass migrations in others. The problem is expected to grow worse if Europe tips into a recession, or if the EU's many heavily indebted countries impose austerity measures to rein in deficits.
-- Alexander Eichler
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#35_eu-rolls-out-plan-to-combat-youth-unemployment2011-12-20T14:11:44-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#34_cashstrapped-italy-weighs-sale-of-its-digital-frequencies
whose debts currently exceed 1.8 trillion euro, or more than 120 percent of the size of its economy -- appears to be considering an auction of six digital frequencies, according to Bloomberg.
Earlier this week, the Italian government walked back plans to assign the frequencies for free. It now seems to be weighing a proposal to auction the frequencies to the highest bidder. Such a sale could net the government about 2.4 billion euro, according to a professor at University of Rome La Sapienza.
"It doesnât make any sense to give away for free scarce resources such as frequencies, especially in light of the financial troubles Italyâs in,â said Dino Bortolotto, head of the telecommunications company Assoprovider, as quoted in Bloomberg.
-- Alexander Eichler]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#34_cashstrapped-italy-weighs-sale-of-its-digital-frequencies2011-12-20T12:36:36-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#33_european-governments-work-out-some-nonbailout-ways-to-fund-banks
generate quick cash for their countries' financial institutions.
Nations including Germany, Italy, Portugal and Spain are moving assets around to help ease the debt burden on their major banks, according to the Wall Street Journal. The hope is that by eschewing any measure that can be characterized as a full-on bailout, the countries can avoid spooking investors with the appearance of vulnerability.
One such method, in use in Italy, involves the government selling its unwanted property to banks, then leasing the property back. Banks can bundle the properties as asset-backed securities and use them as collateral to get loans from the European Central Bank.
Analysts have warned that these solutions are only a temporary fix and that more comprehensive action will be needed to guarantee the safety of European banks, the WSJ reports.
-- Alexander Eichler]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#33_european-governments-work-out-some-nonbailout-ways-to-fund-banks2011-12-20T11:42:45-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#32_euro-falls-against-the-dollar-ahead-of-spanish-debt-auction
11-month low versus the dollar, according to Bloomberg.
There were a number of reasons investors may have been wary during Monday's trading, including a rescue package deal for the International Monetary Fund that fell short of expectations, and tumbles for Asian currencies like the won and the yen as the international community assessed the death of North Korean leader Kim Jong Il.
Monday also saw a sell-off for Bank of America stock that left the company trading at just $4.99 at the closing bell. Overall, the Dow ended the day 100 points down.
On Tuesday, Spain will auction a series of three- and six-month securities. In the past week, Spain has raised about â¬11 billions, in debt auctions an unexpectedly good performance aided by falling interest rates.
Alexander Eichler ]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#32_euro-falls-against-the-dollar-ahead-of-spanish-debt-auction2011-12-19T18:22:50-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#31_eurozone-countries-pledge-150-billion-to-international-monetary-fund
provide â¬150 billion ($195 billion) to the International Monetary Fund, a rescue package that incorporates commitments from eurozone and non-eurozone countries alike, yet may not be far-reaching enough to reassure nervous investors.
The â¬150 billion will consist of contributions from 13 eurozone nations, as well as four countries -- Poland, Denmark, Sweden and the Czech Repoublic -- that are not part of the currency union, Bloomberg reports.
Notably absent is the United Kingdom, whose refusal to pledge money to the IMF means that the architects of the deal will fall short of their â¬200 billion goal. The U.K. will "define its contribution early in the new year," according to a statement from EU finance ministers.
Also not participating in the deal are Greece, Ireland and Portugal, three heavily indebted eurozone countries that have received international bailout funds.
Alexander Eichler ]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#31_eurozone-countries-pledge-150-billion-to-international-monetary-fund2011-12-19T15:27:09-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#30_unemployment-lowpaying-jobs-likely-to-remain-widespread-in-europe-report-finds
a report issued Friday by the European Commission.
Europe's economy is widely expected to shrink in the coming months, which bodes ill for the prospect of a labor market recovery. Youth unemployment in the European Union is at 20 percent, according to The Wall Street Journal, and runs significantly higher for some individual countries. In Spain, for example, 48 percent of young people are unemployed.
Compounding the problem is the ubiquity of low-paying temporary job contracts in Germany, France, Sweden and other countries, according to the WSJ. Many young people are employed under temporary contract arrangements, but these positions offer relatively little chance of moving into a full-time job, and can create a lasting wage gap between temporary and permanent employees.
-- Alexander Eichler]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#30_unemployment-lowpaying-jobs-likely-to-remain-widespread-in-europe-report-finds2011-12-19T14:19:22-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#29_spains-incoming-prime-minister-offers-details-on-economic-reform
Spain's looming budget deficit.
Rajoy told members of Parliament Monday that his government will pass a provisional 2012 budget by the end of December, according to the Financial Times.
Under Rajoy's plan, public sector hiring is expected to drop off sharply, and all forms of public spending except pensions will be vulnerable to cuts, the FT reports. The proposed budget aims to reduce Spain's deficit by â¬16.5 billion, according to BBC News.
Spain has an unemployment rate of nearly 23 percent, the highest of any developed economy. Rajoy told Parliament that measures to reform the labor market would be devised by the end of March.
Alexander Eichler ]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#29_spains-incoming-prime-minister-offers-details-on-economic-reform2011-12-19T12:27:01-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#28_dominique-strausskahn-scolds-european-heads-of-state
had harsh words for eurozone leaders Monday, according to the Financial Times.
Speaking at a conference in Beijing, Strauss-Kahn said that European debt crisis was in fact "a growth crisis," and that "[b]ehind the growth crisis is a leadership crisis."
Strauss-Kahn cited German Chancellor Angela Merkel and French President Nicolas Sarkozy as two leaders who were not cooperating as effectively as they could, saying he doubted whether they "clearly understand each other."
Monday marked Strauss-Kahn's first formal address since being charged with the sexual assault of a hotel housekeeper in May, an accusation that was ultimately dropped.
-- Alexander Eichler]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#28_dominique-strausskahn-scolds-european-heads-of-state2011-12-19T11:58:04-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#27_us-dollar-usurps-golds-status-as-safe-haven
the U.S. dollar index rose to its highest level since January as investors fled risky investments after the unsuccessful European Union summit last week, according to The Financial Times.
"Gold evidently failed to uphold its primary role as a safe haven asset," Ross Norman of Sharps Pixley, a retail bullion brokerage, told the FT.
--Bonnie Kavoussi
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#27_us-dollar-usurps-golds-status-as-safe-haven2011-12-16T18:02:40-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#26_european-banks-unlikely-to-bail-out-struggling-european-governments
banks are likely to use the money to pay down their own debts rather than save European governments from higher borrowing costs and the threat of default, according to Thomson Reuters' International Financing Review.
From the article:

Burned by Greek losses, and under the scrutiny of shareholders, banks have slashed their exposure to weaker European sovereigns over recent months. Senior bankers say they will cut further, despite pressure to use newly available, longer-term ECB loans to buy government debt as part of an officially-sanctioned carry trade.

"I can't think for a moment why anyone would want to [buy eurozone government debt]," said the head of capital markets at one European bank that is also reducing its exposure to eurozone sovereign bonds. "Everyone is trying to protect capital. It's counter-intuitive. It would be digging a deeper hole for yourself."

--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#26_european-banks-unlikely-to-bail-out-struggling-european-governments2011-12-16T17:24:19-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#25_moodys-downgrades-belgiums-credit-rating
Belgium's credit rating two notches on Friday: from Aa1 to Aa3.
Moody's attributed the downgrade to the increased risk that the Belgian government took on by bailing out the bank Dexia, "increasing medium-term risks to economic growth" due to budget cuts in the eurozone, and higher borrowing costs for eurozone countries such as Belgium.
The interest rate on ten-year Belgian government bonds was 4.32 percent as of Friday afternoon.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#25_moodys-downgrades-belgiums-credit-rating2011-12-16T17:04:04-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#24_european-airlines-to-slash-costs-as-economy-deteriorates
plans to detail a cost-cutting plan early next year as Europeans turn to cheap airlines and built-in expenses such as the cost of fuel rise, according to The Wall Street Journal.
Christoph Franz, Lufthansa's chief executive, said that the company's operating profit this year will be "well below the figure we require in order to secure our company and our jobs in the future," according to the WSJ.
Air France also plans to announce cost-cutting measures in mid-January, according to the WSJ.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#24_european-airlines-to-slash-costs-as-economy-deteriorates2011-12-16T16:51:48-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#23_french-presidential-candidate-promises-to-focus-on-ecb-for-rescue-if-elected
said on Friday that if elected, he would seek a eurozone rescue from the only institution that he believes can save Europe, according to The Wall Street Journal: the European Central Bank.
Hollande, French President Nicolas Sarkozy's main election opponent, said that the ECB is the only institution with the funding and credibility to be able to provide a full backstop for troubled European governments, according to the WSJ.
"Everyone knows that without a powerful intervention by the ECB, it will be impossible to restore calm on markets," he said.
Knowing that Germany would resist any change to the treaty preventing the ECB from buying bonds directly from governments, Hollande said that he would like to work within the current legal framework, according to the WSJ. "I would rather have a change in practice than a change in the treaty," he said.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#23_french-presidential-candidate-promises-to-focus-on-ecb-for-rescue-if-elected2011-12-16T16:26:36-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#22_sp-traditionally-strong-eurozone-countries-may-suffer-more-than-others-from-recession
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#22_sp-traditionally-strong-eurozone-countries-may-suffer-more-than-others-from-recession2011-12-16T16:11:20-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#21_irish-economy-shrinks-19-percent
shrink 1.9 percent between July and September, according to figures from Ireland's national statistics office cited by The Financial Times.
Ireland thus was the worst-performing economy in the eurozone: a steep turnaround from the previous three months, when the Irish economy performed second best, according to the FT. The Irish economy shrank largely because of a steep decline in corporate investment and consumer demand, the FT wrote.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#21_irish-economy-shrinks-19-percent2011-12-16T16:00:29-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#20_euro-weakens-after-fitch-ratings-issues-downgrade-warning
The euro fell in value on Friday after Fitch Ratings issued a warning that it may downgrade several countries in the eurozone, according to Bloomberg News.
Fitch Ratings revised its outlook to negative on Friday on the credit ratings of Spain, Italy, Belgium, Slovenia, Ireland, and Cyprus. After the announcement, the value of the euro fell to $1.3019 at 1:49 p.m. ET, after gaining earlier in the day, according to Bloomberg News. The value of the euro has fallen 2.7 percent this week: the largest such decline since early September.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#20_euro-weakens-after-fitch-ratings-issues-downgrade-warning2011-12-16T16:00:06-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#19_german-coalition-party-gives-limited-vote-of-confidence-in-merkel
backed the decision to create a permanent eurozone bailout fund: the European Stability Mechanism, according to The Wall Street Journal.
Nonetheless, the sizable minority in the FDP that is skeptical about the euro probably will prevent Germany from pursuing larger bailout efforts, according to the WSJ.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#19_german-coalition-party-gives-limited-vote-of-confidence-in-merkel2011-12-16T14:49:48-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#18_european-debt-crisis-could-boost-exports
could raise economic growth in the eurozone by at least 0.5 percent as long as the fall in the value of the euro sticks, according to The Wall Street Journal.
But the fall in the value of the euro also could keep struggling European countries dependent on exports that no longer will stay competitive over the long term. For example, Portugal's textile industry accounts for 10 percent of the country's exports, according to the WSJ and the head of Portugal's textile association told the WSJ that the weaker euro "will help Portuguese textiles exports, especially for countries outside the European Union."
But this is not a sustainable strategy, said Stijn van Nieuwerburgh, associate finance professor at New York University's Stern School of Business.
"The future of Portugal does not lie in textiles," van Nieuwerburgh told The Huffington Post, noting that the textile industry in emerging economies has boomed. "It will have to lie in something else -- in R&D [research and development] -- and it's going to have to undergo structural reform, and that's just a very painful and slow process."
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#18_european-debt-crisis-could-boost-exports2011-12-16T10:53:47-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#17_france-sneers-at-united-kingdom-while-entering-recession
French finance minister Francois Baroin said on Friday, according to The Financial Times.
The French statistics agency Insee recently forecast that the French economy will have shrunk 0.2 percent between October and December of this year, and that it will shrink another 0.1 percent during the first three months of 2012, according to the FT. It also forecast that the unemployment rate in France, which is currently 9.7 percent, would rise to 10 percent by the middle of 2012.
The Organization for Economic Cooperation and Development (OECD) forecast in late November that the British economy would fall back into recession during the winter because of government spending cuts and the eurozone crisis, according to The Guardian.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#17_france-sneers-at-united-kingdom-while-entering-recession2011-12-16T10:31:57-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#16_monti-survives-confidence-vote
has survived his first vote of confidence over austerity, Reuters reports (via CNBC). His predecessor, SIlvio Berlusconi, barged his way through more than 50. Markets have not reacted to much today and have been flat, although the CAC-40 has started to drop a bit.

The plan, contested by Italy's unions and the opposition Northern League, has been in effect since Monti's government approved it on December 4. But it needed full parliamentary approval within 60 days to remain in force.
The upper house, where Monti is a life senator, is expected to approve the package definitively next week, most likely in another confidence vote.

]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#16_monti-survives-confidence-vote2011-12-16T09:35:37-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#15_hunger-for-rigour
politicians must overlook the short term needs for "rigour" in order to achieve the goal of stability, Reuters reports.

Italian Prime Minister Mario Monti said Europe's response to the debt crisis "should be wrapped in a long-term sustainable approach, not just to feed short-term hunger for rigour in some countries."
"To help European construction evolve in a way that unites, not divides, we cannot afford that the crisis in the euro zone brings us ... the risk of conflicts between the virtuous North and an allegedly vicious South," he told a conference in Rome.

The speech could be interpreted as a thinly veiled attack on Germany, which has routinely blocked market-friendly approaches, such as European Central Bank (ECB) intervention or discussions of collectively-issued eurobonds. ]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#15_hunger-for-rigour2011-12-16T07:53:09-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#14_uk-set-to-rejoin-discussions
is to return to the table for technical discussions surrounding the fiscal integration deal.

The move - agreed on Thursday night in a telephone call between Mr Cameron and the President of the European Council, Herman von Rompuy - is likely to be seen as an olive branch both to the other EU countries and his Liberal Democrat coalition partners.
"The Prime Minister reiterated that he wants the new fiscal agreement to succeed, and to find the right way forward that ensures the EU institutions fulfil their role as guardian of the EU treaty on issues such as the single market," a No 10 spokesman said.

After the crisis deal was agreed last week, there was immediate criticism of Cameron's stance, which many said would not protect the City of London from regulation from Brussels.]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#14_uk-set-to-rejoin-discussions2011-12-16T04:13:20-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#13_lessons-from-the-us-fiscal-union
The Wall Street Journal's David Wessel wrote on Thursday.
A new working paper by the International Monetary Fund found that a rise in borrowing costs in one state resulted in lower borrowing costs in other states: the opposite of the contagion effect of higher borrowing costs in countries across Europe, Wessel noted.
Wessel wrote that there are a few possible reasons why: the markets trust that the federal government (unlike Germany) would bail out a state if necessary, the markets are not concerned that the dollar-union could split apart, and the markets still view the creditworthiness of different states as essentially different. Thus, a fiscal union in Europe both could help and not be enough to prevent higher borrowing costs for struggling countries.
Read the whole story on The Wall Street Journal's website.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#13_lessons-from-the-us-fiscal-union2011-12-15T13:34:10-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#12_ecb-calls-for-stricter-enforcement-of-budgetary-rules
said in a report on Thursday that Europe needs to adhere to stricter budgetary rules than agreed to at the Brussels summit last week.
The ECB particularly faulted the "discretion" that the European Commission and European Council will have in enforcing budgetary discipline, complaining that the European Union would take relevant factors into account and that the punishment of countries that spend more than allowed would not be automatic.
-- Bonnie Kavoussi
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#12_ecb-calls-for-stricter-enforcement-of-budgetary-rules2011-12-15T13:03:25-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#11_ecbs-draghi-no-external-savior-for-eurozone
said in a speech on Thursday that there is "no external savior" for the eurozone and that struggling countries should supposedly save themselves by cutting spending and agreeing to more control of their budgets by the European Union, according to the Associated Press.
"There is no external savior for a country that doesn't want to save itself," Draghi said in Berlin.
Draghi claimed that countries could restore "financial markets' confidence" on their own by committing to restrained budgets over the long term.
Nobel Prize-winning Princeton economist Paul Krugman has dismissed attempts to restore business confidence by slashing government spending as an irrational belief in "the confidence fairy" which never arrives.
Draghi said in response to a question after the speech that he is skeptical about the potential economic impact of buying large amounts of securities, which in this case many observers would want to be European government bonds, according to The Wall Street Journal.
"I don't think quantitative easing leads to stellar economic performance. I see no evidence that quantitative easing greatly boosts the U.K. and U.S. economies," Draghi said.
--Bonnie Kavoussi]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#11_ecbs-draghi-no-external-savior-for-eurozone2011-12-15T12:45:08-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#10_the-story-so-far
The day's main highlights:

The Anglo-French rift on Europe is widening, as both the president and the central bank governor make digs.

ECB chief Mario Draghi said very little in a speech, but indicated that there will be no infinite bond buying.

Technocratic Italian PM Mario Monti got a taste of the fractious politics that finished off his predecessor, and will face a vote of confidence.

Both the Markit Purchasing Managers Index and Ernst & Young forecast a eurozone recession early next year.

Investors, as they have since the EU summit last Friday, been trading into an information vacuum, with little, apart from speculation over the tangled legalities of the summit document.
European Central Bank (ECB) president Mario Draghi gave little away in a speech in Berlin, and the release of the monthly bulletin was equally unenlightening.
There were more weak projections of the eurozone's economic growth, which hit at its debt reduction strategies, but they failed to scare markets any more than they already are. Likewise, the fact that Mario Monti's government will have to face a confidence vote on austerity measures passed without real alarm.
It is possible the market was oversold on Tuesday and Wednesday, but with the way the politics has proceeded to date, it is unlikely that many investors will want to take long positions into the weekend.]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#10_the-story-so-far2011-12-15T12:27:41-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#9_stock-rally-fading-euro-still-fragile
yesterday it hit 11-month lows - but is still below $1.30.]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#9_stock-rally-fading-euro-still-fragile2011-12-15T10:51:01-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#8_mario-draghi-warns-on-new-credit-crunch
said today that the need to recapitalise struggling banks needed to be balanced by the need to free up credit into the real economy.
He said:

Banks in the euro area have recently come under pressure both as regards their capital bases and their funding conditions.
The plan to strengthen their capital bases is an attempt to reinforce their standing in financial markets, but this is not an easy process. There are essentially three options for banks to pursue to raise their capital ratios as demanded by the European Banking Authority: they can raise their capital levels, sell assets or reduce their provision of credit to the real economy.
The first option is much better than the second, and the second option is much better than the third.

Speaking at the Ludwig Erhard Foundation's annual lecture - named after the economist who helped to shape Germany's postwar recovery - Draghi also made what could be a pointed remark about the pressure on the bank itself, saying:

Ludwig Erhard also helped to enshrine the principle of central bank independence. When in the early 1950s the independence of the German central bank system was not yet settled, he as minister of the economy argued that the government should not issue instructions to the central bank. You all know that the statutes of the ECB inherited this important principle and that central bank independence and the credible pursuit of price stability go hand in hand.

Here's the speech in full.]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#8_mario-draghi-warns-on-new-credit-crunch2011-12-15T09:46:02-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#7_european-markets-firm
http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#7_european-markets-firm2011-12-15T09:28:26-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#6_the-russians-are-coming
very brief story on the Reuters wire that quotes a Russian aide to Vladimir Putin saying that the country could put $10bn into the IMF to help the EU.
Jose Manuel Barroso and Herman Van Rompuy are meeting with Russian President Dmitri Medvedev today to discuss possible contributions.
In the scheme of things, $10bn (â¬7.7bn) is not a great deal, when the EU is seeking hundreds of billions of euros.
]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#6_the-russians-are-coming2011-12-15T07:41:32-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#5_italian-government-to-hold-confidence-vote-on-austerity-ap
The move was announced after the session in the lower house had to be suspended this morning, AP reports.
Votes of confidence are relatively commonplace in Italy - Silvio Berlusconi survived more than 50 - and the move is a calculated gamble to reduce the dissent that saw lawmakers from the Northern League protesting in parliament.
From AP:

The vote of confidence was announced in the lower house, where the speaker earlier suspended the session and ejected two lawmakers from the unruly right-wing Northern League who held up banners against the resurrection of a tax on primary residences. The Northern League caucus, the only party not to support Monti's government in a vote of confidence confirming the new Cabinet last month, also whistled in protest of the measures before the chamber.
"Shepherds whistle, not lawmakers," a clearly agitated Gianfranco Fini told deputies as he sought to bring order.

]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#5_italian-government-to-hold-confidence-vote-on-austerity-ap2011-12-15T07:13:51-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#4_italian-employers-forecast-recession-ft
FT reports that the main lobby of Italian employers, Confindustria, is forecasting a contraction of 1.6% in the country's gross domestic product (GDP) in 2012. The group actually predicted a slight rise in its last release, in September, so the number seems indicative of a real worsening of sentiment amongst domestic employers.
Guy Dinmore writes:

âWe are in recession,â Corrado Passera, minister for development, told a Confindustria conference in Rome. âbut this is not our fault,â he said, blaming the crisis on Europeâs âinadequate management of the Greek crisisâ.
Mr Passera warned that without economic growth the governmentâs programme would be âunsustainableâ, with its emphasis on social equity at risk.

]]>http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#4_italian-employers-forecast-recession-ft2011-12-15T06:39:01-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#3_staring-down-the-barrel
http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#3_staring-down-the-barrel2011-12-15T06:08:06-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#2_spain-yields-ease-
http://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#2_spain-yields-ease-2011-12-15T05:57:06-05:00Huffingtonpost.comhttp://www.huffingtonpost.com/2011/12/21/european-debt-crisis_n_1147173.html#1_scary-numbers
are coming to the fore, as Italy's politics shows signs of the kind of polarity and tension that characterised the Berlusconi government.

The European Financial Stability Facility (EFSF), the bail out fund, has â¬275bn left, after committing to support Greece, Ireland and Portugal. The IMF has, possibly, â¬100bn ready to deploy this year. Add to this the â¬150-200bn (dependent on who agrees to pay) from the December 9 summit, and the total is between â¬495-545bn that is deployable in the short term.
By the summer, Italy's debt was more than â¬1.8tr. Italy and Spain between them are going to need to find nearly â¬600bn next year, as existing stocks of debt mature. Their costs of borrowing are well above sustainable levels - Italy paid euro era record highs on its five-year debt auction earlier this week.

"Drawing on our experience restructuring companies along with lessons learned in the US following the bankruptcy of Lehman Brothers, we suggest the ECB consider a sovereign debt guarantee programme as a solution to the European sovereign debt crisis."